In a move to free up some cash and make room for its $34 billion acquisition of Red Hat Inc. (RHT), IBM (IBM) is selling off its enterprise software business for $1.8 billion to HCL Technologies.
HCL Technologies is global services company valued at $8 billion. India-based HCL operates out of 43 countries, serving the financial services, manufacturing, telecommunications, media, publishing, entertainment, retail, and other industries.
Lotus Notes
The sale includes most of IBM’s enterprise business, including Lotus Notes and Domino collaboration software, network management software Tivoli, and other titles. Lotus Notes was developed by Mitch Kapor in 1989 and was a pioneering enterprise software tool that swept the market with features such as email and collaboration workspaces, that we now take for granted.
Lotus, founded in 1982, rose to fame in 1983 with the Lotus 1-2-3 spreadsheet, which drove the popularity of freshly minted IBM PC. IBM took over Lotus for the then astounding sum of $3.52 billion. IBM looked to the Lotus acquisition to change its white-shirt-and-tie culture to embrace the MTV age and the new Internet.
Lotus Notes and Domino ranked among the top client-server groupware and email systems in the 1990s, competing head-on against Microsoft Exchange. While Microsoft successfully migrated Exchange to Office 365 in the cloud, Notes and Domino largely missed the cloud era.
Big Blue acquired Tivoli for $743 million in 1996. It ranked among the leading IT management software providers, competing against CA Technologies, BMC, and HP in the 1990s and early 2000s. Each of those companies stumbled in recent years — opening the door for ServiceNow to disrupt major portions of the market.
The IBM world-view
The HCL deal highlights IBM’s failure to navigate the shift from client-server to SaaS. Lotus Notes stayed a client-server system and lost business to Amazon Web Services (AWS) and Microsoft Azure and Google Cloud Platform.
Now that the business has been lost, IBM is moving in a different direction. Older software like Lotus Notes and Domino don’t really play a role in the new IBM world-view. One IBM solution provider told CRN, “I can understand getting rid of Lotus Notes and Domino Microsoft Office 365 and Google Apps are killing the hell out of Lotus Notes. ”
In addition to Lotus Notes, Domino, and Tivoli, the IBM Software asset sale to HCL includes:
- IBM Appscan, a security-focused application for identifying and managing vulnerabilities in mission-critical applications;
- IBM BigFix endpoint management and security software;
- IBM Unica, a cloud-based enterprise marketing automation software; and
- IBM WebSphere Commerce, an omnichannel commerce platform for B2C and B2B organizations.
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While I am the PM on our move off of Notes to SaaS products like O365, every once in a while I find myself saying that Notes worked well. But then I remember that it is overly complex and proprietary. The client software is huge and bloated and lacks a simple client.
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.